Final Results
LONDON STOCK EXCHANGE ANNOUNCEMENT
JPMORGAN CLAVERHOUSE INVESTMENT TRUST PLC
AUDITED FINAL RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2008
Chairman's Statement
Performance and continuing Appointment of the Manager
2008 was the most difficult year for the UK stock market, and thus for your Company, since 1974. The memory of that earlier year is still with me, coming, as it did, relatively shortly after I began working in the investment world. In my view, 2008 was even more difficult than was 1974 and I am afraid I have to report a second consecutive year of both absolute and relative disappointing performance for your Company.
The total return to shareholders was -32.4%. The total return on net assets was -32.7% as compared with the return of our benchmark, the FTSE All Share Index, of -29.9%. By any standards it was a traumatic year for investors in equities and one which very few commentators, or investment managers, foresaw.
Indeed, however prescient one might have been, it would have been almost impossible to foresee some of the cataclysmic events of 2008 which arose in part from a catastrophic loss of confidence in banks and other financial institutions and in part from errors made by bankers, politicians and policymakers. Confidence is not a commodity that can be bought or sold and since markets were first created the two powerful human emotions of greed and fear have driven them at their extremes. Very clearly in the autumn of 2008 markets were gripped by fear which demanded decisive and visibly competent responses from politicians and policymakers. Unfortunately, in several regards those in charge failed to act successfully to stem the panic at an early stage and when they did act, some of those actions were most unhelpful. With hindsight a particularly unfortunate act was, in my opinion, the decision to allow Lehman Brothers to go bankrupt. Whilst that may have sent a salutary message to those individuals and institutions who had caused such headaches for policymakers, it undoubtedly compounded the problems of the western world's banking system by freezing so many open transactions where Lehman was the counterparty.
Your Board has once again questioned JPMorgan Asset Management (UK) Limited ('JPMAM') as to the effectiveness of the investment strategy which is more fully set out in the Investment Managers' Report. It remains JPMAM's firm belief that the investment process will add value in seven years out of ten and that over time the value of the years of out-performance will outweigh the years of underperformance. That confidence is backed up by JPMAM's back testing of the investment process. As part of the annual process of seeking to have confirmed their continuing appointment as Managers of your Company, JPMAM made a detailed submission reiterating their investment strategy and process and the Board considered this first with JPMAM present and subsequently in a private meeting of Board members. The Board concluded that the continuing appointment of JPMAM was in the interests of shareholders as a whole.
Revenue and Dividends
In 2008 the revenue per share, excluding the impact of the VAT recovery, grew by 22.1%. Normal quarterly dividends have been increased from 15.3p to 16.4p, an increase of 7.2%, once again substantially ahead of the rate of inflation for the 36th successive year. In addition, a special dividend of 3.6p was paid in respect of the proceeds of the VAT recovery.
For several years past the Board has indicated that it expected to continue to increase the total of the normal quarterly dividends ahead of the rate of inflation. However, the prospects in 2009 for company profits are very uncertain and it seems almost inevitable that your Company's earnings per share, arising as they do from dividends paid by companies that are held in the portfolio, will decline materially in 2009. When announcing the fourth quarterly dividend on 5th February the Board stated that it hoped at least to maintain the normal dividend of 16.4p per share for the year ending 31st December 2009, if necessary using part of the Company's revenue reserve to achieve this. The position will be reviewed and updated when we report half-year results in July.
VAT Case
Following the successful outcome in June 2007 of the action brought by this Company and the Association of Investment Companies to declare that VAT should not be charged on management fees for investment trust companies, in December 2008 the Board reached agreement with the Company's Manager on the recovery of past VAT. Previous reports have indicated that the Board would have been disappointed if it had not been possible to recover materially in excess of £2.5 million. I am pleased to report that the total recovery by the Company including interest, was £4,078,000 and this was reflected in the Company's net asset value with effect from 23rd December 2008. As reported above, the proportion of this recovery attributable to the Company's income account has been paid to shareholders as a special dividend.
Gearing
The Company ended the year 9.7% geared. During the year the gearing varied between 7% and 12%. As reported last year, it is the Board's intention to keep gearing within the range of 0-15% under normal market conditions, whilst reserving the right to allow gearing to increase after a serious setback in markets.
Share Repurchases
During the year the Company repurchased a total of 1,549,415 shares for cancellation, at an average discount to net asset value (with debt at par value) of 6.2%. The Board's objective remains to use the share repurchase authority to manage any imbalance between supply and demand for the Company's shares, thereby minimising the volatility of the discount. At the year end the discount with debt valued at par was 5.2% and during the year averaged 6.0%.
Performance Fee
Under the Company's performance fee arrangements the negative balance brought forward from last year has increased by £1.3 million as a result of the underperformance in 2008 and the total balance carried forward now stands at £2.4 million. This will have to be offset entirely in future by out-performance before any performance fee can either be paid or accrued.
Board of Directors
Directors conduct a self-assessment of their performance each year and this is followed up by a conversation with me as Chairman. My own performance is assessed by the Senior Independent Director after he has consulted with all other Directors. A report is made to the Nomination Committee which meets annually to evaluate the performance of the Board, its Committees and the individual Directors.
I became Chairman of your Company in April 2005. In my absence, the members of the Nomination Committee considered my service and confirmed that they recommend that I should continue as Chairman. As I have served as a Director for more than nine years, I am required to seek re-election on an annual basis and a resolution to that effect will be put to the AGM. The Company's Articles require that each director must retire by rotation at least every three years. Accordingly, Virginia Holmes and Anne McMeehan will seek re-election at this year's AGM. I can attest that both Virginia and Anne are fully committed to, and effective in, their roles and I firmly recommend to shareholders that both should be re-elected. Humphrey van der Klugt was appointed to the Board on 1st September 2008 and thus will seek election at the AGM.
As I reported a year ago, Directors' fees were last increased with effect from 1st January 2006. The time commitment and the responsibility of directors do not reduce and fees paid to non-executive directors have, in consequence, increased materially since 2006. Led by John Scott, the Senior Independent Director, the Board has compared the Directors' remuneration with that paid to directors of other investment trusts, both those managed by JPMAM and elsewhere. It is clear that Claverhouse Directors are at the low end of the scale and a resolution to increase Directors' Fees will be put to the AGM. The new rates proposed, with the previous rates shown in brackets, will be Chairman £27,000 (£24,000), Audit Committee Chairman £22,000 (£18,000) and other Directors £18,000 (£16,000). These amount to increases of between 4% and 7% per annum since the last review in 2006. It is not right to allow fees to fall too far behind those paid elsewhere and I hope that shareholders will feel able to support these proposals.
Perhaps even more so than in 2007, the Chairman of the Audit Committee, Virginia Holmes, and I spent a considerable amount of time in 2008 dealing with the VAT issue, resulting in the successful recovery of £4 million. In our absence the other Directors, led by the Senior Independent Director John Scott, decided that the VAT workload has been significantly beyond what would normally have been expected of a Director and they have awarded Virginia and me an extra payment of £5,000 each in recognition of our work on the VAT recovery. These payments do not require shareholders' approval but we will be happy to answer questions in relation to them at the AGM.
Annual General Meeting
For many years past your Company has alternated its AGMs between London and other cities. We have considered the attendance at our out-of-London venues over the last few years and the cost of such meetings. Attendance in London has consistently been very much higher than elsewhere and the costs to the Company per shareholder attending a London meeting lower.
Consequently the Board has decided that once again this year's AGM will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday 8th April 2009 at 12.00 noon. The Investment Managers will give a presentation to shareholders, reviewing the past year and commenting on the outlook for the current year. The meeting will be followed by a buffet lunch, providing shareholders with the opportunity to meet the Directors and the Investment Managers.
The Future
Investors all over the world are very nervous about the valuations of, and prospects for, almost every asset class save for the highest quality defensive assets. That nervousness is driven by a multitude of concerns, the most important of which are the extreme stress of the free world's banking system and the dire outlook for the world's economy for at least 2009 and perhaps beyond. The United Kingdom is in the thick of both of these problems which are compounded by the prospect of a General Election which must be held no later than the summer of 2010.
Whatever the sense of outrage with bankers that politicians, the media and the public may feel, like it or not banking is different to other businesses in that loss of confidence in a country's banking system can damage every part of the 'real' economy. Modern societies could not exist without a functioning banking system and unnecessary risks should not be taken by policymakers motivated by feelings of anger or a desire to punish those responsible for past problems. Although very fragile, a degree of stability has returned to the UK banking system as compared with the traumas of last autumn and it is fervently to be hoped that can be built on and that political opportunism will not dictate future policymaking.
Confidence is at a very low ebb and it is impossible to predict when it will begin to return. The outlook for company profits in 2009 is, in many cases, dismal. Sterling has fallen precipitously against both the US Dollar and the Euro and the authorities have reduced official interest rates nearly to zero. This last aspect in particular marks the time we are living in as unprecedented in modern UK economic history.
So what should investors do? At times like this it seems appropriate to look back to history. No two crises are ever the same but, I venture to suggest, the credit crisis in the US in 1907 and the depression of the 1930s, both of which were accompanied by massive falls in stock markets, would have looked every bit as worrying for investors as the scene looks today.
A recent study has confirmed what other studies have concluded over the years. The clear lesson fromhistory is that investors who hold equities must keep faith with them when times look bleak. The data from the US is more complete than for the UK although, over the long term, the message points to the same conclusion. The trend return for US equities was 6.2% per annum real return over and above the rate of inflation over the period of 1849 to 2008. In the UK the trend was 7.0% per annum real return from 1926 to 2008.
In nominal money terms, unadjusted for inflation, an investor who held an investment in the US S&P Index from 1928 to 2008 would, without any reinvestment of dividends, have seen an investment of $1,000 grow to $53,000. But miss the best 20 months in the market in those 972 months and the investment would only be worth $2,200. Investors in equities cannot risk being out of the market when the market turns up. I do not know when that will be other than to know that stock markets anticipate visible signs of recovery. But personally I am confident it will occur and I remain convinced that equities will once again be generators of wealth for those long-term investors who keep faith with them as an asset class.
Michael Bunbury
Chairman 4th March 2009
Investment Managers' Report
Market Review
2008 was an extraordinary year for equity investors, with fears about the health of the global economy and the financial system dominating the year. Investor confidence was dented by the turmoil resulting from the US sub-prime housing crisis, with illiquid credit markets, large financial write-downs, poor economic data and bank collapses all weighing on sentiment. Having declined by 11.2% in the first six months of 2008, the FTSE All-Share Index delivered a return of -29.9% over the year, the worst year since 1974.
The year began on a weak note as the UK market, along with other global markets, suffered heavy falls on concerns that the US economy was heading into recession. Bad news from the financial sector continued throughout the first quarter, culminating in the rescue of US investment bank, Bear Stearns, by the US Federal Reserve and JPMorgan Chase in March 2008.
A relief rally followed for equities, as investors hoped the worst was over, taking comfort from the successful recapitalisation of several major US financial institutions. However, economic data showed signs of rapid deterioration at home and abroad. In the UK the housing market was a particular cause for concern, with home prices and mortgage approvals dropping significantly, while weakening confidence surveys suggested the ongoing uncertainty was taking its toll on the consumer. The Royal Bank of Scotland announced the largest rights
issue the UK equity market had ever seen (£12 billion), after posting substantial losses and a weakening capital position. However, even this capital raising subsequently proved insufficient.
After a nervous July, during which equity prices fell as oil reached a historic high, and a rally in August as commodity prices eased back, markets took fright in September as the continuing credit crunch led to acute strains in inter-bank lending. During the course of September 2008, this savage bursting of the credit bubble saw some previously august institutions go to the wall or be nationalised. Firstly, the US government bailed out the two giants of the US mortgage sector, Fannie Mae and Freddie Mac, which were taken under government control. On 15th September Lehman Brothers Holdings Inc., the US investment bank, filed for bankruptcy, whilst Bank of America agreed to purchase Merrill Lynch.
The UK's HBOS agreed to be acquired by Lloyds TSB after finding it increasingly difficult to secure funding. Regulators in the UK, the US and Europe also announced temporary bans on the short selling of financial stocks, in response to concerns that price falls had been exacerbated by short selling.
The UK authorities responded to the crisis extensively. The Bank of England cut interest rates five times through the year, taking them down from 5.5% to 2.0% by the year end. Meanwhile, a bailout package for the banking sector was announced, allowing the Government to inject capital into the biggest banks, to guarantee banks' debt instruments and to offer short-term lending support. The Government also cut the rate of VAT in a bid to stimulate consumer spending and announced other fiscal measures to attempt to encourage growth. However, the full consequences of the global financial crisis have still not yet played out, whilst the economic outlook continues to deteriorate.
After heavy losses throughout the autumn, UK equities enjoyed a modest rally in December on hopes that the aggressive policy actions from the Government and the Bank of England would lead to economic recovery in 2009. However, concern grew that banking bailouts and economic stimulus measures would contribute to soaring Government borrowing.
Performance Review
In the year to 31st December 2008 the Company delivered a total return on net assets (capital plus dividends re-invested) of -32.7% against the total return of the benchmark FTSE All Share Index of -29.9%. A detailed breakdown of the performance is given in the accompanying table. Through the second half of 2007 and into 2008 the Company's gearing was reduced. The short term loan from Lloyds TSB was repaid by the end of the first half of 2008 and substantial amounts of cash were held against the long term debenture. Despite these measures, the sharp falls in equity markets meant that the remaining gearing, although modest, was the major cause of relative underperformance of the Company, costing -2.4% for 2008 as a whole. In contrast to the previous year, the underlying performance of the equity portfolio was broadly in line with the market over the year; the first six months delivered out-performance of the falling market, but the second half was more challenging during the extraordinary
market conditions that prevailed.
Over the past twelve months the UK stock market has experienced unprecedented market conditions, particularly during the second half of the year, with a global banking and credit crisis on a scale not seen for over a generation. During the first half of 2008 the Company's investment philosophy of being overweight in both value and growth/momentum styles added value. During this period the portfolio outperformed the declining market, as the Company's momentum stocks performed strongly, whilst the value part of the portfolio did not detract materially from performance. Equity market volatility increased substantially during the second half of 2008, as the global financial crisis deepened and the economic outlook deteriorated sharply. The ongoing fears of further financial collapses, particularly within the banking sector, led to investors reducing their exposure to risk and equities by either deleveraging existing positions or selling their most liquid assets irrespective of their fundamental attractions. Consequently, share price movements were frequently random in nature, ignoring fundamentals and valuations.
At a stock level the most significant contributor to performance over the twelve month period was the overweight position in the major pharmaceutical stock, AstraZeneca, which was held due to its attractive valuation and strong earnings delivery. These characteristics, alongside its relatively defensive nature and favourable US dollar exposure, generated strong out-performance of the wider market, particularly during the second half of the year. The overweight position in GlaxoSmithKline, the other major pharmaceutical stock, also contributed strongly to performance, for similar reasons. The holdings in two other defensive stocks, Unilever and British American Tobacco, both held for their favourable momentum characteristics, also delivered strong out-performance. The Company benefited from its holdings in the two electricity stocks, British Energy and Drax, with British Energy's strong performance being driven both by fundamentals and as a result of bid activity from EdF of France.
By contrast, the largest detractors from performance included the holdings in the two mining stocks, Kazakhmys and Rio Tinto. Although these two stocks performed well during the first six months of the year, their sharp underperformance during the second half, as the global economic outlook deteriorated, more than offset the
earlier gains and resulted in negative contributions for the year as a whole. Those two miners, alongside a number of others, have experienced downgrades to their growth prospects, but are now trading at exceptionally low valuations. Although the portfolio remained underweight in the banking sector throughout 2008, financial concerns impacted related sectors during the second half and the other significant detractors from performance included Old Mutual, the life assurer, and 3i Group and Tullett Prebon, within the general financials sector. For the year as a whole, the
returns to our targeted style tilts were mixed: momentum was a positive contributor to performance, whilst the returns to value were significantly negative.
Once again, the Company's holdings in the JPMorgan UK Smaller Companies Fund and the JPMorgan Smaller Companies Investment Trust continued to outperform the small cap index.
Portfolio Review
The investment philosophy used in running the portfolio remains constant:
On average, fast growing, cheap companies with good newsflow will outperform slow growing expensive stocks with bad newsflow.
This philosophy is based on sound behavioural finance theories and is supported by stock market data going back many decades. In the UK the returns to value and growth strategies are shown in the Company's Report & Accounts, demonstrating that both are capable of delivering significant out-performance over the long term.
In the value strategy, investing in the cheapest ten per cent of companies (decile 1 in the left hand chart) (The chart is shown in the Company's Report & Accounts) has delivered an average return of 10.9% per year since 1990, compared to the market return of 6.6%. In the growth strategy (the right hand chart), investing in those stocks with the strongest share price momentum has delivered an average return of 18.7%, again compared to the market's annual return of 6.6%. To exploit these long term, outperforming strategies the Company is invested in both value and growth/momentum stocks to deliver long term out-performance of the benchmark. Whilst the returns to value stocks have been poor for the last two years, history would indicate that value, as an investment style, will recover.
With the economic environment becoming progressively more difficult as the year developed, a major challenge was to identify areas that offered positive earnings newsflow. The pharmaceutical sector was one such area. During the first half of the year we made substantial purchases of both of the UK's major pharmaceutical companies, GlaxoSmithKline and AstraZeneca. Both stocks had performed particularly poorly in 2007 and had moved to attractive valuations but also offered a source of earnings stability which was further enhanced later in the year as the weakness of sterling boosted the translation of their substantial overseas earnings. Electricity companies also have the potential for stable earnings given their utility nature. The holding in British Energy was increased, as its nuclear generating assets were not affected by the increases in gas and coal input prices that affected other generating companies. As reported in the performance review section, these attractions were identified by the French utility EdF, which bid for the company. Other sectors that we continue to favour include the non-life insurance companies that are now able to raise their premiums following the demise of the major US insurance company AIG and as a result are now seeing considerable earnings growth. For the longer term there is still the requirement for oil companies to explore for new sources of oil and bring those discoveries into production. The oil equipment and services companies have been out of favour in the short term, but we continue to hold companies such as Wellstream, Petrofac and Amec to benefit from this longer term earnings growth.
Whilst ensuring that the portfolio has a consistent exposure to lowly rated companies, we have been vigilant to avoid sectors and stocks most likely to suffer earnings disappointments. The real estate sector is particularly affected by the
economic slow-down as tenants in the office, retail and industrial sectors reduce their space requirements, impacting property companies through reduced rents and falling property values. Following the reductions made in 2007, the holdings in the real estate sector have been further reduced with the sale of British Land and Hammerson. The banking sector has been the focus of much attention by government, regulators and the media throughout the year. The portfolio was underweight in banks during 2008 and whilst we continue with this underweight position at the start of 2009, it is clear that the banks have raised substantial amounts of additional capital. The Government is determined to create the conditions for a properly functioning banking system and share price falls have pushed valuations to substantial discounts to book value, thereby already pricing in further bad news. It will be a sector that continues to need close monitoring.
As well as the banking sector, many other financial and economically sensitive stocks and sectors have suffered dramatic falls in value over the course of the last eighteen months as the impact of a significant recession has been factored into share prices. Valuations in many instances have fallen to below companies' assets, with stocks trading at very low multiples to sales and earnings. For some stocks this is an indicator of financial stress and we will undoubtedly see companies coming to the stock market to raise equity finance to replace expensive or hardto- find bank debt. However, for many companies current valuations are looking increasingly attractive and we will look for opportunities to invest into these situations as the year develops.
Market outlook
2009 began much as 2008 ended, with economic gloom and ongoing concern about the fate of the banks. The UK economy was confirmed to be in recession with the announcement in the fourth quarter of 2008 that GDP contracted 1.5% quarter-on-quarter. The Bank of England has cut interest rates by a further 1%, taking them to 1%, their lowest level for over three hundred years, while the Government announced further assistance for the banks.
The concern is that the Bank of England will start to run out of ammunition as interest rates head towards zero, while the scope for fiscal stimulus may be limited by the mounting Government debt. Consequently, the UK is expected to suffer a severe economic contraction. Business surveys in December 2008 all painted a dismal picture, with manufacturing, construction and services sentiment all at or near record lows. Meanwhile, house prices continue to drop and show few signs of being close to the bottom.
From a long term perspective it is possible to see that the recent weakness in equity markets has taken markets below their long term growth trend of 6.2% real returns per annum. If one hundred and fifty years of history is any guide, we should expect equity markets to recover in the coming years.
On a more short term basis, the UK stock market is also supported by an attractive valuation against historic norms. In previous annual reports we have shown market valuations in a number of ways and in the charts in the Company's Report & Accounts we show the valuation of the market on a price relative to earnings basis (P/E) and also in dividend yield terms.
Market earnings and dividends will clearly come under pressure as the impact of the recession is reflected in company profits; however, as is the case for many individual stocks, it is clear that the market overall is already discounting a significant deterioration in earnings and investor sentiment is at very depressed levels.
It is to be expected that as investors feel able to 'look through' the recession and see companies emerging on the other side, so sentiment and share prices will recover. The timing of this recovery is impossible to pinpoint but, as has been the case in every previous recession and crisis over the last one hundred and fifty years, eventually economies do recover and stock markets will increase in value once more.
James Illsley
Sarah Emly
Investment Managers 4th March 2009
Principal Risks
With the assistance of the Manager the Board has drawn up a risk matrix, which identifies the key risks to the Company.
These key risks fall broadly under the following categories:
• Investment and Strategy: An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount to NAV. The Board manages these risks by diversification of investments through its investment restrictions and guidelines, which are monitored and reported on by the Manager. JPMAM provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses.
The Board monitors the implementation and results of the investment process with the investment managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The investment managers employ the Company's gearing tactically, within a strategic range set by the Board.
• Market: Market risk arises from uncertainty about the future prices of the Company's investments. It represents the potential loss that the Company might suffer through holding investments in the face of negative market movements. The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines, which are monitored and reported on by JPMAM. The Board monitors the implementation and results of the investment process with the Manager.
• Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 842 of the Income and Corporation Taxes Act 1988 ('Section 842'). Details of the Company's approval are given under 'Business of the Company' above. Were the Company to breach Section 842, it might lose investment trust status and, as a consequence, gains within the Company's portfolio would be subject to Capital Gains Tax. The Section 842 qualification criteria are continually monitored by JPMAM and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Act 1985 and 2006 and, as its shares are listed on the London Stock Exchange, the UKLA Listing Rules. A breach of the Companies Act 1985 could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing which in turn would breach Section 842. The Board relies on the services of its Company Secretary, JPMAM, and its professional advisers to ensure compliance with the Companies Act 1985 and 2006 and the UKLA Listing Rules.
• Corporate Governance and Shareholder Relations: Details of the Company's compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance report.
• Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the custodian's records could prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective internal control are included within the Internal Control section of the Corporate Governance report.
• Financial: The financial risks faced by the Company include market price risk, interest rate risk, foreign currency risk, liquidity risk and credit risk. Further details are disclosed in note 19 of the Company's Report & Accounts.
Related Parties Transactions
During the financial year, no transactions with related parties have taken place which have materially affected the financial position or the performance of the Company during the period.
Directors' Responsibilities
The Directors each confirm to the best of their knowledge that:
For and on behalf of the Board
Michael Bunbury
Chairman
4th March 2009
|
|
|
|
2008
|
|
|
2007
|
|
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Losses from investments held at
|
|
|
|
|
|
|
|
|
fair value through profit or loss
|
|
—
|
(113,890)
|
(113,890)
|
—
|
(9,234)
|
(9,234)
|
|
Net foreign currency losses
|
|
—
|
—
|
—
|
—
|
(6)
|
(6)
|
|
Income from investments
|
|
13,335
|
—
|
13,335
|
12,198
|
—
|
12,198
|
|
Other interest receivable and similar income
|
|
772
|
—
|
772
|
22
|
—
|
22
|
|
Gross return/(loss)
|
|
14,107
|
(113,890)
|
(99,783)
|
12,220
|
(9,240)
|
2,980
|
|
Management fee
|
|
(475)
|
(881)
|
(1,356)
|
(679)
|
(1,261)
|
(1,940)
|
|
Performance fee writeback
|
|
—
|
—
|
—
|
—
|
2,138
|
2,138
|
|
VAT recovered
|
|
1,267
|
2,067
|
3,334
|
—
|
—
|
—
|
|
Other administrative expenses
|
|
(658)
|
—
|
(658)
|
(752)
|
—
|
(752)
|
|
Net return/(loss) on ordinary activities
|
|
|
|
|
|
|
|
|
before finance costs and taxation
|
|
14,241
|
(112,704)
|
(98,463)
|
10,789
|
(8,363)
|
2,426
|
|
Finance costs
|
|
(766)
|
(1,423)
|
(2,189)
|
(1,054)
|
(1,958)
|
(3,012)
|
|
Net return/(loss) on ordinary activities
|
|
|
|
|
|
|
|
|
before taxation
|
|
13,475
|
(114,127)
|
(100,652)
|
9,735
|
(10,321)
|
(586)
|
|
Taxation
|
|
(49)
|
—
|
(49)
|
(21)
|
—
|
(21)
|
|
Net return/(loss) on ordinary activities
|
|
|
|
|
|
|
|
|
after taxation
|
|
13,426
|
(114,127)
|
(100,701)
|
9,714
|
(10,321)
|
(607)
|
|
Return/(loss) per share (note 3)
|
|
23.38p
|
(198.70)p
|
(175.32)p
|
16.28p
|
(17.30)p
|
(1.02)p
|
|
Dividend per share
|
|
|
|
16.40p
|
|
|
15.30p
|
|
Special dividend per share
|
|
|
|
3.60p
|
|
|
—
|
|
|
Called-up
|
|
Capital
|
|
|
|
|
|
share
|
Share
|
redemption
|
Capital
|
Revenue
|
|
|
|
capital
|
premium
|
reserve
|
reserves
|
reserve
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
At 31st December 2006
|
15,268
|
149,641
|
5,604
|
169,087
|
13,143
|
352,743
|
|
Repurchase and cancellation of shares
|
(683)
|
—
|
683
|
(15,249)
|
—
|
(15,249)
|
|
Net (loss)/return from ordinary activities
|
—
|
—
|
—
|
(10,321)
|
9,714
|
(607)
|
|
Dividends appropriated in the year
|
—
|
—
|
—
|
—
|
(8,975)
|
(8,975)
|
|
At 31st December 2007
|
14,585
|
149,641
|
6,287
|
143,517
|
13,882
|
327,912
|
|
Repurchase and cancellation of shares
|
(387)
|
—
|
387
|
(7,099)
|
—
|
(7,099)
|
|
Net (loss)/return from ordinary activities
|
—
|
—
|
—
|
(114,127)
|
13,426
|
(100,701)
|
|
Dividends appropriated in the year
|
—
|
—
|
—
|
—
|
(9,025)
|
(9,025)
|
|
At 31st December 2008
|
14,198
|
149,641
|
6,674
|
22,291
|
18,283
|
211,087
|
|
|
|
2008
|
2007
|
|
|
|
£’000
|
£’000
|
|
Fixed assets
|
|
|
|
|
Investments at fair value through profit or loss
|
|
231,599
|
353,230
|
|
Investments in liquidity funds at fair value through profit or loss
|
|
8,924
|
10,289
|
|
Total investments
|
|
240,523
|
363,519
|
|
Current assets
|
|
|
|
|
Debtors
|
|
1,034
|
807
|
|
Cash at bank and in hand
|
|
86
|
24
|
|
|
|
1,120
|
831
|
|
Creditors: amounts falling due within one year
|
|
(879)
|
(6,788)
|
|
Net current assets/(liabilities)
|
|
241
|
(5,957)
|
|
Total assets less current liabilities
|
|
240,764
|
357,562
|
|
Creditors: amounts falling due after more than one year
|
|
(29,677)
|
(29,650)
|
|
Provisions for liabilities and charges
|
|
—
|
—
|
|
Total net assets
|
|
211,087
|
327,912
|
|
Capital and reserves
|
|
|
|
|
Called up share capital
|
|
14,198
|
14,585
|
|
Share premium
|
|
149,641
|
149,641
|
|
Capital redemption reserves
|
|
6,674
|
6,287
|
|
Capital reserves
|
|
22,291
|
143,517
|
|
Revenue reserve
|
|
18,283
|
13,882
|
|
Shareholders’ funds
|
|
211,087
|
327,912
|
|
Net asset value per share (note 4)
|
|
371.7p
|
562.1p
|
|
|
|
2008
|
2007
|
|
|
|
£’000
|
£’000
|
|
Net cash inflow from operating activities
|
|
14,934
|
7,951
|
|
Returns on investments and servicing of finance
|
|
|
|
|
Interest paid
|
|
(2,208)
|
(3,028)
|
|
Taxation
|
|
|
|
|
Overseas tax recovered
|
|
1
|
—
|
|
Capital expenditure and financial investment
|
|
|
|
|
Purchases of investments
|
|
(211,554)
|
(262,276)
|
|
Sales of investments
|
|
221,060
|
290,434
|
|
Other capital income/(charges)
|
|
3
|
(9)
|
|
Net cash inflow from capital expenditure and financial investment
|
|
9,509
|
28,149
|
|
Dividends paid
|
|
(9,025)
|
(8,975)
|
|
Net cash inflow before financing
|
|
13,211
|
24,097
|
|
Financing
|
|
|
|
|
Repurchase of shares
|
|
(7,149)
|
(15,166)
|
|
Repayment of short term loan
|
|
(6,000)
|
(15,000)
|
|
Drawdown of short term loan
|
|
—
|
6,000
|
|
Net cash outflow from financing activity
|
|
(13,149)
|
(24,166)
|
|
Increase/(decrease) in cash for the year
|
|
62
|
(69)
|
|
|
2008
|
2007
|
|
|
£’000
|
£’000
|
|
Unclaimed dividends refunded to the Company
|
(3)
|
-
|
|
2007 fourth quarterly dividend of 5.2p (2006: 4.9p) paid in March1
|
3,020
|
2,978
|
|
First quarterly dividend of 3.5p (2007: 3.3p) paid in June
|
2,023
|
1,987
|
|
Second quarterly dividend of 3.5p (2007: 3.3p) paid in September
|
1,995
|
1,953
|
|
Third quarterly dividend of 3.5p (2007: 3.5p) paid in December
|
1,990
|
2,057
|
|
Total dividends paid in the year
|
9,025
|
8,975
|
|
|
2008
|
2007
|
|
|
£’000
|
£’000
|
|
Fourth quarterly dividend of 5.9p (2007: 5.2p) paid in March
|
3,351
|
3,034
|
|
Special dividend of 3.6p (2007: nil) paid in March
|
2,044
|
-
|
|
Return/(loss) per share is based on:
Revenue return
Capital (loss)/return
Total (loss)/return
Weighted average number of shares in issue
Revenue return per share
Capital (loss)/return per share
Total loss per share
|
|
|
|
|
Net asset value
per share
|
Net assets
attributable
|
||
|
|
2008
pence
|
2007
pence
|
2008
£’000
|
2007
£’000
|
|
Ordinary shares
|
371.7
|
562.1
|
211,087
|
327,912
|
This information is provided by RNS
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